Converting to Materia?

So I know I can do it.... just how?
Got a couple of spiritbonded items was about to sell to de-clutter the armour chest but as they are spiritbonded I can convert them to materia to strengthen newer armor/weapons right? Do I need to have doen a quest or have levelled up a craft?

You need to unlock the ability to convert it through the main story quest, once you get it, you can convert most of your items to materia by checking the subcommands